Boost for Northern Pass partners?

The six New England governors, working with the New England States Committee on Electricity (NESCO) and regional grid operators, have launched a process under which Northern Pass partners may be able to acquire substantial ratepayer funding and eminent domain powers for the controversial plan to bring hydroelectricity from Quebec into New England.

As a follow-up to their Energy Infrastructure Initiative, announced in December, the governors through NESCO plan to select a low-carbon transmission project by issuing requests for proposals. The winner of the RFP process would be eligible for cost-recovery through a tariff administered by ISO-NE, the independent system operator.

Adding ratepayer money to the participant funding could make the economics more attractive for burying more of the lines.

But if Northern Pass partners qualify for regional ratepayer support, they could then be eligible to use eminent domain, despite HB 648.

HB 648 was approved by the state Legislature and signed into law in 2012, largely to prevent Northern Pass from using eminent domain. The law states that, “No public utility may petition for permission to take private land or property rights for the construction or operation of an electric generating plant or an electric transmission project not eligible for regional cost allocation, for either local or regional transmission tariffs, by ISO-New England or its successor regional system operator.”

The New England Power Pool’s Transmission Committee got an update on the governors’ initiative from NESCOE at the committee’s monthly meeting on Friday. A copy was posted on the ISO-NE website.

Among the key points:

• The states will seek NEPOOL support for two new projects — one related to power transmission, one related to gas pipelines.

• States intend to select a project or projects through an RFP process.

• The ISO-NE tariff will be the vehicle for billing and collection, creating “regional electric power system solutions funded by regional electric power system customers.”

• This is a preliminary proposal. States are working out the details; no agreement has been finalized.

Beginning the process

William Hinkle, a spokesman for Gov. Maggie Hassan, said the Friday meeting was the beginning of what could be a long road.

“RFPs would not be issued until after a public process, probably not until late 2014 or early 2015,” he said. “A variety of projects could be considered under this approach, and they will be vetted and scrutinized to ensure that the winning bidders meet a strict cost-benefit analysis for each state in the region.”

Hinkle said there are likely to be multiple bidders for both the transmission and pipeline projects.

“There are numerous potential gas and electric transmission projects that could serve the region, including proposals in Vermont and Maine, and the RFP process does not commit New Hampshire or the region to moving forward with any particular project, as everything will be evaluated based on responses,” he said. “New Hampshire has been very clear that we will not move forward with proposals that don’t reduce costs to ratepayers, and that all proposals must meet local siting requirements.”

Northern Pass spokesperson Laura Collins said it’s too soon to say if Northeast Utilities and its partners will respond to the RFP, but she sounded optimistic.

“Based on what New England’s governors have called for in announcing their infrastructure initiative, Northern Pass would be an ideal fit for beginning to address the region’s precarious energy situation,” she said. “Since the criteria for this potential proposal is not final, we can’t speculate on what it might specifically mean for Northern Pass.”

She hinted at the argument Northern Pass could make in the RFP process.

“The RFPs stand to be transformative for the region,” she said. “We’re seeing that with increased discussions by developers around possible new energy sources and transmission lines. Northern Pass, however, is years ahead in the process. It has a secured route and stands alone in the region as the only project with an identified source of power.”

Robust review

If the governors’ initiative results in a plan to recover project costs from the region’s electricity customers, the ISO would administer the billing and collection as it does for all transmission projects in New England.

“Any changes to the ISO tariff would have to go through a robust stakeholder process and be filed at the Federal Energy Regulatory Commission for approval before they would be implemented,” said Marcia Blomberg at the ISO.

Jonathan Perez, a vice president and director with the Conservation Law Foundation, said the CLF is monitoring developments closely. The New England-wide environmental advocacy group is a member of NEPOOL and has a representative on the Transmission Committee.

“The devil’s in the details,” he said. “It’s an open question about the extent to which reducing carbon is the governors’ primary motive here, and the extent to which the final solicitation will actually result in reduced carbon. Those are all open questions.”

Perez said ratepayer-funded transmission lines and gas pipelines may not be necessary.

“The CLF believes that by and large market-based mechanisms are the best way to procure new electric capacity in the region,” he said, “and we believe that market-based mechanisms work in the interest of reducing greenhouse gas emissions and in the consumer interest. There are a number of transmission providers who have been very clear and adamant that they do not need any ratepayer support for their projects.”

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